The End of the H1-B: The Market for Attorneys Tightens

I’ve discussed in previous posts how stagnant U.S. law school graduation rates, combined with increased demand by AMLAW 100 tier firms for top legal talent, has motivated law firms to search further and further abroad for highly qualified associate talent. One effect of this has been increased costs for legal employers - both in respect of the cost of seeking and hiring foreign attorneys, as well as the cost of higher salaries and other retention costs as firms compete, in a situation of diminishing supply, to keep the lawyers they already have.

The supply crunch problem has now become acute with the effective closure of the H-1B Visa regime commonly used by our clients to import foreign legal talent. As of today, the US Citizen and Immigration Service (USCIS) has announced that it will reject any new applications for H-1B visas for jobs beginning on October 1, 2008. This is because it has already received, within the first two days of the start of the application period, at least 150,000 H-1B petitions to meet the congressionally mandated cap of 65,000 visas (or 85,000 visas using a different criteria) for this application period. This means that lawyers from countries other than Australia and Canada (who have their own visa regimes) are effectively blocked from legal employment in the United States, unless they fall under the one of the more restrictive alternative visa regimes.

Historically, the number of available H-1B visas were allocated on a first-come-first- served basis, resulting in new H-1Bs being denied or delayed where the annual quota was already filled. With the reduction in the amount of available visas from a high of 195,000 in 2000 to a low of 65,000 today, the amount of available visas (the “quota”) has been exhausted increasingly quickly. Last year, the quota was filled two months after the start of the application period. This year, as mentioned, the number was filled in less than 2 days – meaning that unless an employer had an application completed and ready to go on March 31^st, then they were more then likely to fail in any attempt to obtain the visa. Barring any changes to the quota - the situation will grow worse next year.

Obviously, this is great news for U.S. attorneys who will reap the benefits of the upward pressure on their salaries as the supply of qualified lawyers gets tighter. And this is clearly lousy news for law firms that have been trying to avail themselves of a broader pool of high-quality candidates - since they will likely conclude that the risks of a failed H-1B application do not justify the time and expense of recruiting a top foreign candidate.